Thought Leadership

Be Smart About Smartphones

(article originally published in the New Hampshire Business Review, March 2010)

Q. The president of XYZ Corp., a company with about 500 employees at locations throughout the state, is considering issuing smartphones to all employees to help them stay in touch with each other and with customers both at work and while away from the office. Will the company have to pay its employees for the time they spend using their smartphones away from the workplace?

A. These days, BlackBerrys, iPhones and other "smartphones" seem to be everywhere. The ability to e-mail, text and talk with co-workers and clients anywhere and at any time makes staying connected a lot easier -- maybe too easy.

Some smartphone users say they have become "addicted" to constantly checking their messages. And some employers take advantage of having their workers available no matter what time it is or where their employees are, whether at their kids' soccer games or on vacation.

All this convenience may come at a price. Under New Hampshire and federal law, "non-exempt" employees -- non-managerial employees who are paid by the hour -- must be compensated for all the time they work. The law is still catching up to the new smartphone technology, but many attorneys are advising employers that hourly employees must be compensated for using their smartphones when they are "off the clock."

This issue first started getting a lot of attention in the summer of 2008, when a group of ABC-TV writers and producers began demanding to be paid for the time they spent responding to e-mails and telephone calls on their smartphones while they were away from the office. At first, the network attempted to get the workers to sign waivers acknowledging that they could be required to use their smartphones away from the office without any additional pay. When the workers refused to sign the waivers, the network confiscated the smartphones. The employees' union, the Writer?s Guild of America East, intervened, and the network and the employees reached an undisclosed settlement.

Since then, a number of class action lawsuits, including a suit against T-Mobile, seeking wages for time spent using smartphones, have been filed and are working their way through the court system. In these lawsuits, hourly workers who were required to use company-issued smartphones outside their normal working hours are seeking to recover overtime pay.

The T-Mobile employees claim that they were required to answer e-mails, text messages and phone calls from co-workers and customers during their off hours. They say that when they complained to their bosses, they were told there was nothing that could be done, and it was just part of the company's standard business practice.

It is impossible to predict the outcome of these cases, but an opinion letter recently issued by the U.S. Department of Labor may shed some light on the issue. In answering an inquiry into whether an employee?s "on-call" period constitutes hours worked under the Fair Labor Standards Act, the department stated that whether time spent on call is compensable is a question of fact to be determined based on the unique circumstances of each case.

The department pointed out, however, that when on-call conditions are "so restrictive or the calls so frequent that the employee cannot effectively use that time for personal purposes," on-call time is likely compensable. It is not hard to imagine an employee fielding so many texts, e-mails and telephone calls on a company-issued smartphone that time away from the office could be considered an extension of the work day, and therefore compensable hours worked.

Until the law in this area is clear, attorneys are counseling employers to think carefully before issuing smartphones to employees, especially non-exempt employees.

The safest approach would be to give smartphones only to exempt employees -- managerial employees who are paid a salary and who are not entitled to overtime pay. When employers do decide to give smartphones to non-exempt employees, lawyers suggest that the employers implement clear policies for the use of the devices, to ensure that employees are being appropriately compensated for time worked, and to avoid problems down the road.

For example, employers could instruct employees that the smartphones are for use during the workday only, and require that employees leave the devices at the office when they leave for the day.

In the alternative, employers could instruct employees to use the devices after hours only when specifically instructed to do so -- for example, when employees need to be reachable near an important deadline -- and to track the time spent using the smartphone. This alternative is problematic, however, since, under New Hampshire law, it is the employer's responsibility, and not the employee's, to maintain a true and accurate record of each employee's hours worked.

For the president of XYZ Corp., the smartest course in considering whether to issue smartphones to employees may be to issue the devices to exempt employees only. If the company chooses to issue them to non-exempt employees as well, the company should issue clear policies about when and where the devices are to be used.

Adam Hamel, an associate in the Employment Practices Group of McLane, Graf, Raulerson & Middleton, can be reached at 603-628-1189 or [email protected].

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